Strategic Moats & Growth Engines
6 concepts · ~30 min · Advanced
Understand the four pillars of durable competitive advantage: network effects, flywheels, switching costs, and GTM strategy. Learn why some companies become impossible to displace.
What You'll Learn
- ✓Identify which of the 4 moat types (network effects, switching costs, brand, scale) your business can build
- ✓Draw your company's flywheel and identify the bottleneck component limiting growth
- ✓Map your network effect type (direct, two-sided, data, platform) and measure its strength
- ✓Audit your switching costs across financial, procedural, data, and emotional dimensions
- ✓Choose the right GTM motion for your ACV and measure GTM efficiency
Competitive Moat
Strategy
💡 The Concept
A competitive moat is a durable advantage that protects your business from competitors, just like a castle moat keeps invaders out. Warren Buffett popularized the term: he only invests in companies with 'wide moats.' The 5 types are: network effects, switching costs, brand, cost advantages, and proprietary technology. Companies with strong moats earn 20%+ returns on capital vs 8-10% for those without.
⚠️ The Trap
The biggest trap is confusing a head start with a moat. Being first to market is NOT a moat — 47% of first movers fail because followers learn from their mistakes and execute better. A real moat gets STRONGER over time, not weaker. If a well-funded competitor could replicate your advantage in 18 months, you don't have a moat.
🎯 The Action
Identify which of the 5 moat types your business can build. For network effects: measure how much harder it gets for competitors as you grow. For switching costs: calculate the total cost for a customer to switch (data migration + retraining + downtime + opportunity cost). Aim for switching costs that exceed 6 months of your subscription price.
Scenario Challenge
You've built a B2B analytics tool with 500 customers. A competitor with 10x your funding launches a near-identical product at half your price. Your customers have 18 months of data in your platform and have built custom dashboards. What should your primary strategy be?